The Lawyer UK 200 preview: Top performers: Mishcon accomplished with lateral hires
15 August 2011
Litigation powerhouse homes in on £80m target without resorting to merger. Joanne Harris reports
Identifying the UK 100’s top-performing firms in 2010-11 has proven a difficult task, owing to the sheer amount of consolidation in the market.
Mergers pushed three firms into the top 100 for the first time. Midlands firm Shakespeares, litigation boutique Stewarts Law and South East firm Birketts all bolted on smaller firms and as a result rocketed up the rankings.
Meanwhile Gateley and Barlow Lyde & Gilbert both benefited from acquiring parts of failed firm Halliwells’ business, and Weightmans merged with Mace & Jones and Vizard Wyeth’s insurance team at the end of the year to boost its turnover significantly.
Norton Rose’s January 2010 merger with Australia’s Deacons was also notable, pushing the UK firm’s turnover up by 59 per cent to £488m.
When it comes to those firms that have not gone down the merger route, Mishcon de Reya is at the top of the pile. Turnover grew by almost 30 per cent in the last financial year, breaking through the £60m barrier for the first time to hit £61.1m.
Managing partner Kevin Gold’s strategy of bringing on board 10 lateral hires was the key to Mishcon’s success, while the consolidation of a number of teams into a new ’Mishcon Private’ group also helped.
The firm has a 70-strong partnership, with 29 equity partners. On average, each equity partner will take home at least £575,000 in profit, a rise of 27.8 per cent on 2009-10. Mishcon’s profit margin also improved last year, rising from 21 per cent to 22.6 per cent.
Mishcon is now into the second year of a three-year strategy aimed at boosting revenue to £80m. Thanks to last year’s outstanding performance, the Holborn firm is not only well on the way to reaching its aggressive doubling-in-size budget, but looks like it will easily beat it.
Indeed, if the additional £4.3m generated by its New York office, which is run as a separate LLP, is factored in, Mishcon is already even closer to that magic £80m. Adding in New York would also bump up the firm’s top of equity from £800,000 in the UK to £1.5m.
Litigation continues to power Mishcon, contributing 37 per cent of total revenue, while property and corporate chipped in 20 per cent and 14 per cent respectively.
No other firm quite matches Mishcon’s turnover rise, but one can beat it on profitability. Berwin Leighton Paisner’s (BLP) 56.5 per cent rise in average profit per equity partner (PEP) brings its figure to £712,000. Top of equity is now a magic circle-worthy £1.4m, although the £321,000 bottom of equity is down on last year’s £343,000.
Not that BLP had a bad year in headline terms, either. Turnover rose by 20 per cent to £229m on the back of a solid performance in its emerging market offices, as well as in London.
Wragge & Co is celebrating its turnover coming back over the £100m mark after the slump in the property market hit revenue in 2009-10. A 17.6 per cent rise in turnover gave a final result of £113.1m, coupled with a similar PEP increase of 17.8 per cent from £276,000 to £325,000.
Wragges is one of the few firms to operate an all-equity partnership, which means it is also one of the more profitable firms in the UK 100. The firm’s 2010-11 profit margin was 34.3 per cent, keeping it near the top of the profitability table.
International work is increasingly important for Wragges, contributing twice as much to revenue as it did three years ago.
Stephenson Harwood also broke through the £100m barrier last year, although unlike Wragges this was the first time the firm achieved this milestone. Its revenue of £107m was 16.4 per cent up on 2009-10’s £91.9m and meant Stephensons beat its budget for the year.
Stephensons now has 103 partners in total. Just over half of these are equity partners, pocketing an average of £610,000 in profit for the last year. Stephensons’ PEP rise of 8.7 per cent is, though, modest compared with the other top performers, and brings the firm back to the level it was in 2008-09.
Northern firm DWF also had a strong year. A good beginning - turnover was up by 12 per cent at the half-year stage - heralded an even better finish. Overall revenue was up by 16.1 per cent to £83m, while PEP rose by 11.4 per cent to a respectable £388,000.
Most of the growth came from the firm’s corporate and insurance practices, compensating for a smaller rise in property and a drop in private client work.
Aggressive lateral hiring, which increased DWF’s partnership from 117 partners in 2009-10 to 127 last year, should help the firm maintain its strong performance.
Although Mishcon, BLP and the like were the standout performers in 2010-11, they were far from alone in doing well. Several firms managed double-digit turnover growth, including insurance firms Clyde & Co and Holman Fenwick Willan, North West firm Hill Dickinson, niche healthcare firm Capsticks and employment-focused Lewis Silkin.
With the 2011-12 financial year now well underway, many of these firms will be hoping that they can repeat last year’s performance.
Please click table to view the larger version.